A Dozen Smaller Banks Favored for Upside

Keefe Bruyette favors names such as Bank of Marin and BBCN.

Keefe, Bruyette & Woods Thursday upgraded its rating on small and mid-cap banks -- those with less than $50 billion in assets -- to Overweight from Market Weight and named 12 favorites in that group for 2012.

"We believe the smaller banks have much greater license to return capital, have greater prospects for impactful M&A (mergers and acquisitions) for both buyers and sellers, have opportunities to increase market share...